A Change in Direction for Saks Fifth Avenue

"Clearly, there is a cultural change going on, focusing on adapting to this new environment," Stephen I. Sadove, chairman and chief executive officer of Saks Inc., told WWD. "It involves cost management, controlling inventories and ensuring that strategies are sound for the short term as well as long term. Business is terrible. It's a tough environment. We feel the team has responded remarkably well."

For the $3 billion Saks, there's been no letup in the pressure, as the company on Tuesday reported a $5.1 million loss and a 26.9 percent sales decline, to $621.3 million from $850 million, in the first quarter ended May 2.

Shareholder pressure could increase, too, as Diego Della Valle, chairman and ceo of Tod's, reportedly intends to boost the stake in Saks held by his firm Diego Della Valle & C. S.A.P.A. from 5.9 to 10 percent and might seek to present a turnaround plan to Saks' management. According to a report in the Italian newspaper Il Sole 24, Della Valle also wants to meet with Carlos Slim Helu, the Mexican billionaire who owns 18.6 percent of Saks. The company is not officially on the market but could be a good investment, considering its low but rising stock price, closing at $4.81, up 73 cents, or 17.9 percent, on Tuesday on the New York Stock Exchange.

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Meanwhile, Saks' management remains more focused on fixing the mix. The luxury chain is striving for its "best" brands, the top tier, including Chanel, Jil Sander and Oscar de la Renta, to comprise roughly 25 percent of the mix, down from about a third. About 75 percent will be equally divided, more or less, by "better" labels (such as Max Mara and Burberry) and "good" lines (such as Tory Burch and Lafayette 148). These two tiers each represent about one-third of the assortment.